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Heikin Ashi – The Noiseless

Candlestick - Brijesh Bhatia


DECMA 2018: 10th & 11th March 2018, Lavasa.
www.definedge.com
Day 1
Session 1
Heikin Ashi – The Noiseless
Candlestick - Brijesh Bhatia
What is Heikin Ashi (HA)?

The modified candlestick pattern


Objective in nature
Trend is Friend Heikin means
Visually understandable pattern Average
No over dress please
Ashi means Speed
How does it look like……

Body Shadow

Bullish

Bearish

Doji / Reversal HA
Heikin Ashi (HA) Candlestick formula

HA Open = (Open of T-1 + Close of T-1) / 2


HA Close = (Open + High + Low + Close) / 4
HA High = Maximum of High, Open or Close
HA Low = Minimum of Low, Open or Close
Pros & cons of Heikin-Ashi trading

Pros
Only 3 types of candles
Visually understandable pattern
Narrow downs volatility
Detects a strong trend
It calms the nervous mind on When to Exit.
Eliminates false signals

Cons
A slow mover – confirmation is late so sometime risk is too high
Unfavourable for scalpers
HA Setups and Trend

Bullish Trend
BearishTrend

Bearish Trend
Bullish Trend getting Stronger
getting Stronger

Bearish Trend
Bullish Trend
getting Weak
getting Weak

Bullish Reversal Bearish


Reversal
A visual representation
Heikin Ashi vs Traditional Candlestick

Japanese
Heikin Ashi
Candlesticks
3 candles 100+ candles

Objective Subjective

Simple rules Complicated rules

Indicates exhaustion of trend No such signals


Heikin Ashi vs Japanese Candlestick – A visual representation
Strategies
Strategy – Trade the Trending (Daily Chart)

Entry:
Buy – the following day after big bullish HA candle without shadow after
reversal
Sell – the following day after big bearish HA candle without shadow after
reversal Buying HA Selling HA

Exit:
Criteria 1 – When more than 2 exhaustive HA occurs, below the lowest low or highest high of
last 3 candles or
Criteria 2 – In case of reversal candle, low or high or previous of HA candles
Example: BankNifty
Example: TCS
Example: Apollo Hsp
Example: Adani Power
Example: Jet Airways
Example: Lupin
Example: Talwalkars
Example: Bitcoin
Thank You..

Happy Trading.

* Charts discussed in presentation are for educational purpose only. The speaker does not suggest any trades.
Session 2
MULTIBAGGER
STOCKS
Zafar Shaikh
Founder & CEO INVESYS
Hello!
I am Zafar Shaikh
• BE (MECHANICAL)

• PROFESSIONAL TRADER & INVESTOR


(15 YRS EXPERIENCE)

• FOUNDER & CEO - INVESYS

Zafar Shaikh
MULTIBAGGER STOCKS
CAGR ( COMPOUNDED ANNUAL GROWTH RATE )

• CAGR is most important factor in wealth creation

• Higher the CAGR faster the wealth creation

• CAGR depends on:


• Price appreciation
• time

• Reasonable CAGR for wealth creation?


MULTIBAGGER STOCKS
RICHEST INVESTORS

Approx.CAGR 20% Approx.CAGR 40%


MULTIBAGGER STOCKS

HOW TO ACHIEVE HIGH CAGR?

FOUR CRITICAL DECISIONS

• Buy right stock – stock in uptrend

• Buy at right time - beginning of new trend

• Abort non performing stocks – save capital & time

• Exit at right time – rotate capital to new trends


MULTIBAGGER STOCKS
BUYING THE RIGHT STOCK – UNDERSTAND THE TREND

TATA STEEL JUST DIAL


31/3/2015-Rs 316 31/3/2015-Rs.1323
31/12/2017-Rs 698 31/12/2017-Rs. 522
RETURN +120% RETURN -61%
MULTIBAGGER STOCKS
BUYING AT THE RIGHT TIME

SESHA PAPER SESHA PAPER


31/1/2011-Rs.227 31/3/2016-Rs.227
25/10/2017-Rs.770 25/10/2017-Rs.770
CAGR +20% CAGR +118%

BUY HERE
BUY HERE
MULTIBAGGER STOCKS
DUMPING THE STOCK WHICH DOESN’T PERFORM AS PER EXPECTATION

ANILLIMITED ANILLIMITED
31/12/2015-Rs.314 31/12/2015-Rs.314
31/08/2016-Rs.232 25/10/2017-Rs.29
RETURN -26% RETURN -90%
TIME SAVED 14 MTHS TIME LOST ????

SELL HERE
STILL HOLDING?
MULTIBAGGER STOCKS
BOOKING PROFIT EFFICIENTLY AT RIGHT TIME

LUPIN
LUPIN
29/05/2009-Rs.156
29/05/2009-Rs.156
29/01/2016-Rs.1710
31/12/2017-Rs. 885
EXIT 2 -CAGR +43%
CAGR +22%

LUPIN
29/05/2009-Rs.156
31/08/2010-Rs.356
EXIT 1 -CAGR +93%
STILL HOLDING?
MULTIBAGGER STOCKS
THE BULL & THE BEAR – BENNER CYCLES

LUPIN
LUPIN
29/05/2009-Rs.156
29/05/2009-Rs.156
29/01/2016-Rs.1710
25/10/2017-Rs.1026
EXIT 2 -CAGR +43%
CAGR +25%

LUPIN
29/05/2009-Rs.156
31/08/2010-Rs.356
EXIT 1 -CAGR +93%
STILL HOLDING?

BULL MARKETS TOPS – 8 TO 10 YRS

BEAR MARKET BOTTOM – 8 TO 10 YRS


MULTIBAGGER STOCKS
THE BULL & THE BEAR – BENNER CYCLES

BSE SENSEX 2018


2008 ??
LUPIN MAJOR TOP LUPIN
29/05/2009-Rs.156
29/05/2009-Rs.156
29/01/2016-
25/10/2017-
Rs.1710
Rs.1026
EXIT 2 -CAGR +43% 2000 2009
CAGR +25%
199
2

2001 MAJOR
LUPIN1993
29/05/2009- BOTTOM
Rs.156
31/08/2010-
STILL
Rs.356
RSIEXIT
AVERGAE BELOW “55”
1 -CAGR +93%
HOLDING?
STARTING POINT FOR PRIMARY
BULL MARKET
MULTIBAGGER STOCKS
MULTIBAGGER TREND TYPES

HDFC TATA MOTORS

LUPIN
LUPIN
29/05/2009-Rs.156
29/05/2009-Rs.156
29/01/2016-Rs.1710
25/10/2017-Rs.1026
CAGR +43%
CAGR +25%

PERPETUAL CYCLICAL
LUPIN
HDFC BANK
29/05/2009-Rs.156 SAIL
31/08/2010-Rs.356
CAGR +93%
STILL HOLDING?
MULTIBAGGER STOCKS
SOME STATS

➢ Analysis of BSE stocks with high liquidity – 1745 stocks

➢ Stocks given more than 500% return since 2008 – 441

➢ Stocks meeting set-up condition (RSI average < 55) – 397 (90%)

➢ Average return – 1554%

➢ Average return (excluding top 10) – 1192%

➢ Average holding ( entry point to peak) – 16.6 quarters

➢ Standard deviation of holding period – 8.1 quarters


MULTIBAGGER STOCKS
HOW TO IDENTIFY MULTIBAGGER STOCKS AT RIGHT TIME?

TWO APPROACHES

• FUNDAMENTAL ANALYSIS

• TECHNICAL ANALYSIS
MULTIBAGGER STOCKS
FUNDAMENTAL ANALYSIS

▪ Financials – balance sheet, profit loss, cash flow

▪ Price projections using future sales & profit

▪ Advantages – accurate financial picture, easy for stock


valuation, can project future financial trends

▪ Disadvantages – difficult for layman, time consuming, no


guarantee of price rise, not useful for identifying trend, entry
timing or exit, future financial may deteriorate
MULTIBAGGER STOCKS
TECHNICAL ANALYSIS

• Charts– price trends, patterns ,indicators,

• Price projections using charts & trends

• Advantages – leading indicator, easy to understand, takes


less time, all trading action captured in price, easy to project
price trends, good for timing

• Disadvantages – no connection with fundamental, difficult


for valuation, can lead to choosing financially weak stocks
MULTIBAGGER STOCKS
THE SOLUTION?

• Our unique approach

• Techno-Fundamental analysis
• Combine Technical & Fundamental analysis

• Two step process

• Select stocks based on chart


• Perform fundamental analysis on selected stocks
MULTIBAGGER STOCKS
TECHNO FUNDAMENTAL ANALYSIS - THE PROCESS

• Entry set-up

• Financial health check – fundamental analysis

• Entry confirmation

• Low risk entry

• Initial & trailing stop loss

• Profit booking
MULTIBAGGER STOCKS
CHART SET-UP FOR STOCK SELECTION

ENTRY SET UP - QUARTERLY CHARTS

• Stock is in downtrend or sideways trend for last 5-10 years

• RSI average dips below 55

• From lowest point of last 5 years, price starts to rise and creates
price pivot
MULTIBAGGER STOCKS
STOCKS SELECTION FOR MULTIBAGGER

DOWNTREND FOR LAST 5 YEARS

PRICE PIVOT

STOCK RISES FROM BOTTOM AND


FACES RESISTANCE CREATING PRICE PIVOT

TRIX BELOW“0”- CORRECTION COMPLETE

RSI AVERAGE BELOW 55


MULTIBAGGER STOCKS
QUALITATIVE ANALYSIS OF ENTRY SET-UP

• Stock is not hitting all time lows

• RSI average does not fall below 40

• Drop in price from top , though substantial , is not vertical

• Price is consolidating, rather than falling


MULTIBAGGER STOCKS
QUALITATIVE ANALYSIS OF ENTRY SET-UP

GOA CARBON GITANJALI


LUPIN
LUPIN
29/05/2009-Rs.156
29/05/2009-Rs.156
29/01/2016-Rs.1710
25/10/2017-Rs.1026
CAGR +43%
CAGR +25%

JP ASSOCIATE
HEG
LUPIN
29/05/2009-Rs.156
31/08/2010-Rs.356
CAGR +93%
STILL HOLDING?
MULTIBAGGER STOCKS
FUNDAMENTAL ANALYSIS

• Fundamentals are lagging / follow price

• Well connected investors buy before big quarterly results

• Big investors buying can be identified by qualitative analysis of price


pattern

• Best quarterly results happen after substantial price movement

• Waiting for good quarterly results can cause opportunity loss

• Only basic health check of stock is sufficient

• Market rewards stability and growth in earnings


MULTIBAGGER STOCKS
FUNDAMENTAL ANALYSIS – KEY POINTS

• Earnings growth – most important parameter >15%

• Sales to market cap > 1

• PE ratio between 5 to 15

• Operating margins > 5%

• Debt to equity < 1.5

• Debt service ratio > 2

• Price to book < 2

• Positive operating cash flow


MULTIBAGGER STOCKS
ENTRY PIVOT –QUARTERLY CHART

• Price rises from lowest point of last 5 yrs

• Faces resistance at certain price level.

• Current candle low is below previous candle low.

• The highest price in entry pivot formation is trend


breakout point.

• In next few candles, if price high crosses trend breakout


point and price close is above resistance, then entry is
confirmed.
MULTIBAGGER STOCKS
ENTRY PIVOT

NTPC 1) PRICE RISE AND RESISTANCE


3) PRICE PIVOT BREAKOUT

PRICE PIVOT

2) CANDLE LOW BELOW


PREVIOUS LOW
MULTIBAGGER STOCKS
TARGET

• Target are calculated based on Fibonacci projections.

• However, target based on linear projections are too small.

• Hence use target based on log projections.

• Important Fibonacci extensions : 162% , 200% , 262%, 424%

• To calculate target, not high and low point of last 5 years and
apply log projections.
MULTIBAGGER STOCKS
TARGET

CUPID 3) TARGET 161.8% – RS 407


ACTUAL HIGH - 500

1) RECORD HIGH OF
LAST 5 YEARS – 67

2) RECORD LOW POINT OF LAST 5


YEARS -3.6
MULTIBAGGER STOCKS
INITIAL STOP LOSS – MONTHLY CHARTS

• During correction, price finds support at 10 SMA low.

• ATR (average true range) indicator captures normal price range of


candle.

• As a measure of safety, keep initial stop loss at a price of 1 ATR below


support line of 10 SMA low.

• You can calculate stop loss value by subtracting ATR value from value of
lower line of 10 SMA channel.

• Initial stop loss risk based on this strategy is 30%.

• However, this stop loss is very rarely triggered. Hence, no need to


worry about big stop loss.
MULTIBAGGER STOCKS
INITIAL STOP LOSS

LUPIN

10 SMA (LOW)

RIDE THE TREND USING THIS


1) ENTRY POINT STOPLOSS LINE

INTIAL STOP LOSS – 1 ATR BELOW


LOWER LINE
MULTIBAGGER STOCKS
TRAILING STOP LOSS – MONTHLY CHARTS

• As trade moves in to profit, keep raising stop-loss.

• When trade starts to move in profit, slope of 10 SMA low also


becomes positive and it starts rising.

• For trailing stop loss, in beginning phase, follow the same


strategy of keeping stop loss 1 ATR below lower support line.

• During this phase, if price low touches lower support line, you
can tighten stop loss to candle low after candle is completed.
MULTIBAGGER STOCKS
TRAILING STOP LOSS

LUPIN

10 SMA (LOW)

TIGHTEN STOPLOSS TO
TOUCHPOINT LOWS OF 10 SMA
LOW LINE

LOOSE STOP LOSS – 1 ATR BELOW


LOWER LINE
MULTIBAGGER STOCKS
PROFIT BOOKING- MONTHLY CHARTS
• Let your profits run and book profit only when trend matures.

• Premature exit is reason for not creating wealth through stocks.

• There is no perfect indicator to identify exit near the top.

• We rely on combination of 2 exit strategies for profit booking.

• After RSI average becomes overbought and RSI crosses below RSI average,
take SL below previous candle low for 50% of the position.

• Some trends mature at this exit signal and do not create new high for next
3-5 years.

• For remaining 50% position, keep following lower line of 10 SMA low as
stop-loss and exit position after price closes below this line.

• This strategy will ensure that you remain invested in those stocks which
keep rising for 10 years or more.
MULTIBAGGER STOCKS
PROFIT BOOKING

SESHA PAPER
EXIT 1

1) BOOK
50% PROFIT
-735

1) RSI OVERBOUGHT AND RSI


CUTS BELOW AVERAGE
MULTIBAGGER STOCKS
PROFIT BOOKING

SUVEN LIFE
EXIT 1

1) BOOK
50% PROFIT - 230

1) RSI OVERBOUGHT AND RSI


CUTS BELOW AVERAGE
MULTIBAGGER STOCKS
PROFIT BOOKING

LUPIN
EXIT 2

2) BOOK REMAINING
1) RSI OVERBOUGHT AND 50% PROFIT
PRICE CLOSE BELOW LOWER
CHANNEL LINE - 1700
THANKS!
Any questions?
You can find us at :

WWW.INVESYS.IN
support@invesys.in
Zafargs79 Invesys1
www.facebook.com/invesys

7028159879 9284885218
Session 3
High Probability Low Risk Trading
- Junaid
What kind of trading result do you
want?
A
What kind of trading result do you
want?
B
Casino Style of trading
A
Objective based trading
B
- High probability Low risk trading CANNOT be
done without Objective / Goals

- Indicators and Strategies are the 2 main


components of HPLR trading
Characteristics of ● You have to create goals.
○ Weekly, monthly goals
Objective based ● You have to create rules.
● You have to follow the rules.
trading
How to arrive at High
probability Low Risk trading
system
My Goal is to take home 2% every week.
- 2% a week will double my deployed capital in less than year.

40 points a week in BankNifty is 2%


Or
2.3 points in Reliance is 2%
Or
17 points in Nifty is 2%

Are the numbers


Tough???
What are the tools available to me to meet
my Objectives - The 2 Components of HPLR

Objective / Goal

Charting Tool Strategies

Moving Delivery / Short Call / Put


HA / ZTrend Futures
Averages Cash straddle Spreads
What can Heiken Ashi / Ztrend do

- Help find End of a Trend


- Low risk entry points, even if it is
not end of trend.
- Stop you from buying bad dips.
- Makes you automatically wait.
End of Trend

Bad dip buying


Low risk entry
points, even if it
is not end of
trend.
Few Rules of ZTrend
- First bounce after steep fall or First dip after steep rise is
false
Strong Trend with false Dips
- Small dips in strong uptrend.
Never fight it. Even if you are not selling. Dont short.
Few Rules of ZTrend
- Change in trend bars look like this.
Few Rules of ZTrend
- More examples of change in trend. Small bars at the end
Few Rules of ZTrend
- Wait for the bar to close. It can be deceiving and changing.
Such conditions are low probability entries
Few Rules of ZTrend
- Check trend on atleast 2 timeframes higher for confirmation.
- 2 hourly, 4 hourly, Daily, Weekly.
Few Rules of ZTrend
- You can use other
methods along very effectively and
very confidently.
2 hourly Banknifty
ZTrend with Stochastics (34,1,3)

First green Ztrend


candle, after a dip in
stochastics below 20
4 hourly Banknifty
ZTrend with Stochastics (34,1,3)
2 Hourly Reliance
ZTrend with Stochastics (34,1,3)
And Channels
Daily or 4 Hourly Tatamotor
ZTrend with Stochastics (34,1,3)
And Channels
Few more rules of HPLR
● It does not protect you from whipsaws. So better trade it on
instruments which exhibit clear trends on it.

● It is not asking you to be in trade all the time. You need to


wait and keep quiet and wait for right setup. Sometimes you
have to wait for many days.

● Exit if your weekly, monthly goal is met and wait for next
trade.
Save yourself from common Traps
● Market is doomed… World is going to end…
Save yourself from common Traps
● Next 6 months 12000 is coming…. Then 7500 will come.

● Directionless trading. Trade what the market is doing right


now. And not what it will do in future.

Market is not going to give you award if your prediction comes


true, there is very high chance that you will not make a single
penny even if your prediction comes true.
Picks many multibaggers on your
own
HPLR trading is not with
indicators alone.
It about selecting right instrument, right strategy and right
position size.
Assuming that i am a very unlucky
person on this earth.

Even after high probability


confirmations, Still i am assuming that the trade will
go against me by atleast 2-3%

What are the strategies i can use now assuming that trade will
go against my position after entry ???
What are the strategies I
can use to meet my Goal?
Futures High Risk High Return.
Medium Probability

Futures with 2x Call Medium Risk Medium


Return
Short (far OTM)
Medium Probability

Short Straddle or Medium Return Medium


Risk High Probability
Strangle

Cash Buy and 1x Call Low risk, Low Return,


Medium Probability
Short

Combination of some
other strategies
Right Entry Point
+
Right Strategy/instrument/position to manage
Risk
=
HPLR (High Probability Low Risk) trading
Thank You
Session 4
RELATIVE
STRENGTH INDEX
R.S.I.
PRESENTATION BY:
MUKTA
DHAMANKAR
INTRODUCTION
• RSI developed by J. Welles Wilder in 1978

• It is calculated on closing price of instrument

• It indicates the strength/weakness of instrument

• Oscillates between the range of 0-100

• Default setting used -14 days time frame


MOMENTUM
OSCILLATOR
Concepts to understand while using
RSI:

1. Over Bought / Over Sold

2. Range Shift

3. Divergence between the indicator &


price
OVERBOUGHT / OVERSOLD
Typically RSI: Above70 is overbought
(O/B)
Below 30 is oversold (O/S)
OVERBOUGHT / OVERSOLD

Tweaking: OB levels to 60
OS levels to 40
has given satisfactory trade
set ups
Application of O/B & O/S Concept

• RSI can remain in o/b and o/s territory for a


long period of time
• RSI is o/s does not mean that the instrument
can be bought
• RSI is o/b does not mean that the instrument
can be shorted
• A trade can not be initiated using only o/b &
o/s concept
NIFTY
WKLY

RSI can remain o/b & uptrend


may continue
NIFTY WKLY

RSI can remain o/s and downtrend


may continue
So…. what does RSI
tell us?
TREN
D
……A trend is our friend till it bends
at the end
RSI RANGE AND
TREND
Trend Range
Uptrend 40 – 80
Strong Uptrend 60 - 80
Downtrend 65 – 20
Strong 40 – 20
Downtrend
Sideways 40 – 60
Sidewa
ys

RSI abv 60 -
80
RSI 40-
60
sidewa
ys

RSI 40-
60 RSI below
40
Sideways trend

Strong uptrend RSI breaks


RSI abv 60 down from
60
RSI between 40-
60
RANGE SHIFT

BULLISH BEARISH
LONG
ENTRY

RANGE RANGE

SHORT
SHIFT SHIFT

ENTRY
RANGE SHIFT
• The unconventional way to use RSI is by
checking its RANGE

• When markets are bullish RSI oscillates


between 40-80

• When markets are bearish RSI oscillates


between 65- 30
BULLISH RANGE SHIFT
1. Prior Down trend
2. Firstly, RSI records a value below 40
3. RSI forms a double bottom at 40
(Pls note: Prior Value of RSI is below 40)
Down trend seems to have ended

Marking the beginning of Up trend


BULLISH RANGE
SHIFT

Bottom formed

RSI double
bottom at 40

RSI records low


below 40
BEARISH RANGE SHIFT
1. Prior up trend
2. Firstly, RSI records a value above 60
3. RSI forms a double top at 60
(Pls note: Prior Value of RSI is above 60)
Up trend seems to have ended

Marking the beginning of Down trend


BEARISH RANGE Top
formed
SHIFT

RSI value
abv 60
RSI double top
at 60
Concept of Range shift
can be applied to any
time frame that we are
trading
Range shift can be applied to any Bullish range
time frames
shift
on monthly
charts
Range shift can be applied to any
time frames
TRENDLINES ON RSI
• Trendlines can be drawn on RSI

• They help to plot divergences and


reversal patterns

• They also point us the significant


turning points in markets

• It is a leading indicator
AMALGAMATING
RANGE SHIFT WITH P&F
CHARTS
Bullish Range shift
Bearish Range
Shift
Divergence
In Price & RSI

Divergences are seen when price


moves in one direction and RSI
moves in different directions
Divergences are
best plotted using
Line charts
(closing price)
Types of
Divergence
1. Bullish
2. Bearish
3. Hidden Bullish
4. Hidden Bearish
Characteristics of
Divergences
1. A bullish divergence is typically seen at end
of downtrend
2. A bearish divergence is typically seen at end
of uptrend
3. A hidden divergence is typically seen in the
middle of the trend … indicating that the
trend continues
Bullish
divergence
Crossing of
high is
confirmatio
n of
divergence

L
L

H
Bearish H
H
Divergence

Breaking of
swing low is
confirmation of
divergence

L
H
Hidden Bullish Breakout from
Divergence swing high is
confirmation of
divergence

H
L

L
L
Bearish Hidden
Divergence
Breaking of
swing low is
L confirmation of
L divergence

H
H
Also do not trade
against the
divergence/ range
shift of higher time
frame
Bearish Range Shift on wkly time frame

RSI abv 60

RSI double top @60


TATA MOTORS Daily

Bearish Range ---- rewarded


Shift well --- did not reward well
Bullish Range Shift
POINTS TO PONDER
It is very important to be patient
while trading with RSI

It can be daunting if a hasty entry


is taken
Basically trade can be initiated
using RSI only after confirmation
from price
Entry did not
trigger as prices
did not cross
swing high

L
L

Bullish Divergence
---
Failed

RSI crossed
swing high

H
L
Bullish Range ----
Shift Failed

RSI double
bottom @ 40

RSI bottom
Bearish Range ----
Shift Failed

RSI high (abv RSI double top


60) @ 60
Bearish ----- H
Divergence Failed H

LH
Thank You !!
Session 5
A PRESENTATION
By D PRASAD
E Mail : d.prasad1@gmail.com

Mobile - 9810018028

ON SPOTTING MULTIBAGGER STOCKS


THREE TOOLS TO IDENTIFY MULTIBAGGERS

• ROUNDING BOTTOM PATTERN


• RSI>60
• CHIKOU SPAN - SUPPORTING
• VOLUME EXPANSION - SUPPORTING
Rounding Pattern
✓The Rounding Bottom is a long-term reversal
pattern that is best suited for Monthly charts
✓Forms over a longer period of time.
✓Long Distribution followed by long
Accumulation.
✓Bearishness giving rise to bullishness due to
change in fundamentals.
✓Target – Size of the pattern.
Volumes in Rounding
✓ In an ideal pattern, volume levels will track
the shape of the rounding bottom: high at the
beginning of the decline, low at the end of the
decline and rising during the advance.
✓Volume levels are not too important on the
decline, but there should be an increase in
volume on the advance and preferably on the
breakout.
RSI
• INSTEAD OF 70/30 START USING 60/40 LEVELS
• Bull Range : 80/ 40
• Bear Range: 60/ 20
• Sideways Range: 60/ 40
• Super Bullish Zone : Above 60
• Super Bearish Zone : Below 60
• Super Bullish Stocks : Above 60 in D/W/M
• Super Bearish Stocks : Below 60 in D/W/M

!! NEVER ARGUE WITH THE MARKETS !!


!! PRICE MOVES, REASON FOLLOWS !!
!! EASY CHOICES, HARD LIFE. HARD CHOICES, EASY LIFE !!
!! MANY THINGS ARE EASIER TO PREVENT THAN FIX !!
!! PRICE MOVES, REASON FOLLOWS !!
!!PRACTICE UNTIL YOU CAN’T GET IT WRONG !!
CHIKOU SPAN

•IT IS TODAY’S PRICE SHIFTED 26 PERIODS BACK .


•CHIKOU SPAN – MEASURES MOMENTUM
•HELPS YOU KNOW IF THE UPTREND WOULD BE SMOOTH OR
NOT
•OPEN CHIKOU = SMOOTH TREND
•INTERMINGLED CHIKOU = RESISTANCE IN THE UPTREND

!! OWN NOT THE MOST BUT THE BEST !!


!! TRADE ON YOUR OWN IDEAS AND STYLE !!
!! PRICE MOVES, REASON FOLLOWS !!
!! NEVER ARGUE WITH THE MARKETS !!
!! BUY RIGHT AND HOLD TIGHT !!
!! DO WHAT IS RIGHT AND NOT WHAT IS COMFORTABLE !!
!! BE SURE OF A GOOD REASON FOR ANY TRADE INVESTMENT YOU MAKE !!
!! MARKETS ARE NEVER WRONG, OPINIONS ARE !!
!! INVEST YOUR LINEAR INCOME TO EARN EXPONENTIAL INCOME !!
!! BIG MONEY IS ONLY IN THE WAITING !!
!! GREED KEEPS ME GOING, FEAR KEEPS ME ALERT !!
!! SUCCESSFUL INVESTING IS ABOUT MANAGING RISK !!
!! INVESTORS WORST ENEMY IS HIS EMOTIONS!!
!! SELL WHEN YOU CAN AND NOT WHEN YOU WANT
Thank You
Session 6
Melul Bosamia
+91 9920692108

Kanti KaKa
Why this so called ‘Out-dated’
theory today?
Many of them resembles candlestick
patterns… then?
Brief Introduction of the Legend “Kanti KaKa”.

Starts Journey as a Disciple of Mahatma Gandhi(1921-


1942) as a Freedom Fighter at the age of 11 years to a
Trader in Stock Market with the help of hand drawn
charts and finally wrote a book on Technical Analysis viz.
“Vaida Bazar ni Chavi”(Gujarati), a complete book for a
trader with in-depth trading techniques, money
management and trader’s psychology. Remember, it was
not the time of computers and internet and we even
Technical analysis was also not that popular in India.
Terminology
• In charts – patterns like Head & Shoulder, Cup and
Saucer, Flag etc.
• Similarly, Kaka uses own terminology like
Gangotri, Habess, Kick, Gulant, Dhruv, Uchallan,
Galoli, Purnaviram, etc.
• We will see in-depth each Chavi (pattern) for
bullish and bearish trades.
Hand drawn chart of Bombay Dyeing
Before start Please note….
• For long – majority ‘chavis’ are for bottom fishing,
Ample quantities of shares available at
reasonable rate with low risk & Vice Versa for
shorts.
• I have given mathematical formula and examples
of candle stick chart for each pattern. Please
study it again and again, understand it well and
then start with small quantity.
• As a trader we should always be alert to take a
trade, book the profit or loss & reverse the trade
if the situation demands.
Never Trade your Belief or View,
Trade what you see in the Chart

M.B.
DHRUV
EXAPMLE OF DHRUV - NIFTY
Lets start with the very first
“GANGOTRI”
GANGOTRI
Gangotri (Long)

Gangotri – A (Short)
IPCA - Daily Gangotri (DG)
AFL (DG)
HEXAWARE (DG)
KAYA (DG)
- (Daily Gangotri )

Gangotri formation &


my observation
- (DG)
- (DG)
Nifty – Gangotri – A (DGA)
Nifty – Gangotri – A (DGA)
TPLPLAST -Weekly Gangotri (WG)
IB VENTURE (WG)
IB VENTURE (WG)
ON MOBILE (WG - Failure)
UCHALLAN
UCHALLAN

PACHDAT
EXAMPLE OF DAILY UCHALLAN
Example of week Uchallan
Example of week Uchallan
MONTH UCHALLAN EXAMPLE. – Axis Bank
Month Open High Low Close

May’13 297 310 282.2 286.1


June’13 284.8 288.8 241.55 265
July’13 264.8 271 203.1 206.9
August’13 208.8 232.5 156.8 166.55
Sept’13 169.1 234.55 152.65 201.55
Oct’13 203.55 252.3 202.55 244.5
Nov’13 245 251.45 202.11 231.15
Dec’13 231.95 268.5 231.6 259.9
Jan’14 260.3 265 221 224.55
Feb’14 222.4 254.35 216.5 253.4
Mar’14 252 295 249.5 292.1
April’14 294 311 282 303.4
May’14 305.05 385.75 303.3 367.2
MONTH UCHALLAN – Phillips Carbon
HABESS
HABESS (LONG)

AARIYA (SHORT)
“Habess” means to lift object UP with
Chain pulley block
HABESS EXAMPLE – IPCA LAB
Habess – IPCA LAB CHART
HABESS EXAMPLE – Reliance (weekly)
Aariya – Nifty Future (Feb’18)
GALOLI
GALOLI

GOFAN
EXAMPLE OF Galoli
GURBHA
GULANT
EXAMPLE OF GULANT – MONNET ISPAT

DATE OPEN HIGH LOW CLOSE


14.3.14 66 66.6 61.55 62.05
15/16/17 MKT. CLOSED
18.3.14 62.4 63.20 58.3 58.9
19.3.14 59 63.85 59 61.15
20.3.14 62 69.8 61.6 68.05
21.3.14 69.9 81.35 68.25 78.45
22.3.14 79.45 94.1 78.6 92.8
27.5.14 151.2 162 145 150
PALANTHI
PALANTHI - TOP

PALANTHI - BOTTOM
PALANTHI – Example - SBIN
PURNAVIRAM ? (PV)
Example of Prunaviram
Kaka also say’s
• Kaka’s Thumb rule – buy only above open
price and short only below open price
• Study all the keys carefully, understand it
first, do paper trading and than start with
small quantity.
• Always be alert to grab an opportunity
• Do charity regularly from the money earned
from the stock market/MCX/Currency .
Mehul Bosamia
Mobile no. 9920692108/7977120747
Email id –
mehulbosamia@rediffmail.com
Session 7
Money Management Techniques

Vivek Gadodia
Dravyaniti Consulting LLP

DECMA Conference – March 10, 2018


What is Money Management
• Central Idea: When I make a trade, how much do I trade ?
• At some level, if you take a single trade, it amounts to gambling.
• How multiple trades also can result in gambling: The famous “double your bet
when you lose” example:-

Bet Size Cum Loss % Of Capital Lost


100
200 300 0.29
400 700 0.68
800 1500 1.47
1600 3100 3.03
3200 6300 6.16
6400 12700 12.41
12800 25500 24.93
25600 51100 49.95
51200 102300 100.00
If one gets 8-10 losing trades in a row, which is not uncommon, the capital becomes 0. This is no
different from gambling.
Ground Rules
• The movie “21” is a fact-based story on a team of 6 MIT students who develop a
“card-counting method” in BlackJack
• Key lessons:
– Team-mate known as spotter signals by hands when the “deck is hot”
• Bet when the odds are in favour only

– Spotter signals to move on from current table by running her hands through her hair i.e. “enough
money has been made on this table”
• Stop Betting when the odds are not in favour. Move to the next table where the “deck is hot”

– Double-Down by splitting when 2 cards of 10 are dealt.


• Increase bet size when odds are in favour.
First Defend, Then Attack
• Magnus Carlsen has a unique style of play in his games of chess
• His edge comes from:-
– Strong “Middle-Game” where most players tire out, Carlsen displays very high levels of stamina
– Creative play
– Ultimately, forces the opponent to make a mistake
– Does not do any “Soul-Searching” after making a mistake. Learns from them, and moves on
• The 5 best games he has played, have all been “defensive” games
• Stockfish – AI driven Open-Source Chess Engine, has rated Carlsen as the best
player of all time, since his moves have been closest to the engine’s prediction
• As traders, we are playing Chess with the markets. Same principle applies : “First
Defend (by protecting capital), Then Attack (aiming for profits)”
Why it is difficult to play Defense
• Our Brain is not designed to take losses, so we don’t book losses.
• In the process, we finally land up taking “Huge Losses”
• A graduate student of Psychology in a Swedish University did an experiment
– Created 2 groups of traders.
– One group received a 3-hour lecture on trading psychology, risk management and position sizing.
The other group did not receive any training
– Both groups then traded stocks on simulator, with same rules, only position size could be different
– It was found the traders who had received the lecture had 90% lesser losses than ones who did not
get training
– Also, this group did not gain significantly higher profit than the other group. But in the longer run,
they had higher chance to survive, as quite a few traders in the other group were blowing up their
account.
Source: http://www.turtletrader.com/johan/
Many other valuable resources: https://www.trendfollowing.com/resources/
Techniques
• Loss per trade, on Average, should be approx 1% to 2% of capital
• Using Indicator based trailing stop loss allows to “Cut Losses Short” and “Let
Profits Run”
• Turtle Rules : Volatility Based Position Sizing
Volatility Entry Price Stop Loss Stop Account Risk Per Contracts to
Price Distance Size Trade Buy

LOW $ 100 $ 96 $4 $ 100000 2%($2000) 500


HIGH $ 100 $ 90 $ 10 $ 100000 2%($2000) 200

– Max. 4 Units in a single market (e.g. Gold), Max. 6 Units in a group of Co-Related markets (e.g. Gold
& Silver)
– Max. 12 Units on Long side

A quick reminder: correlations describe how


“similar” two markets move. A positive
correlation means that the two markets move
in the same direction and a negative
correlation means that they move in opposite
directions.
Correlations & Risk
Techniques
4.75

4.25

3.75
MTF
3.25
CONS_LS

2.75 CONS_LO
CONS_NBN
2.25 ISO
DNC_PORT
1.75
NIFTY
1.25

0.75
03-Dec-12

03-Dec-13

03-Dec-14

03-Dec-15

03-Dec-16
03-Jun-12

03-Jun-13

03-Jun-14

03-Jun-15

03-Jun-16
03-Apr-13
03-Apr-12

03-Apr-14

03-Apr-15

03-Apr-16

03-Aug-16
03-Oct-12

03-Oct-13

03-Oct-14

03-Oct-15

03-Oct-16
03-Aug-12

03-Aug-13

03-Aug-14

03-Aug-15
03-Feb-13

03-Feb-14

03-Feb-15

03-Feb-16
MTF - High Beta + Short-Term Momentum + Breakout
Cons_LS - All Beta + Swing + Retracement
Cons_LO – Long Only Cons_NBN – Index Regression ISO – Intraday Short Only

Running a Portfolio of Non-Correlated Strategies can significantly reduce risk


and increase the probability of surviving and making money
Techniques
DNC_PORTFOLIO
4.7500

4.2500

3.7500

3.2500

2.7500
DNC_PORT
2.2500

1.7500

1.2500

0.7500
03-Dec-12

03-Dec-13

03-Dec-14

03-Dec-15

03-Dec-16
03-Jun-14
03-Jun-12

03-Jun-13

03-Jun-15

03-Jun-16
03-Apr-12

03-Apr-13

03-Apr-14

03-Apr-15

03-Apr-16
03-Oct-12

03-Oct-13

03-Oct-14

03-Oct-15

03-Oct-16
03-Aug-12

03-Aug-13

03-Aug-14

03-Aug-15

03-Aug-16
03-Feb-13

03-Feb-14

03-Feb-15

03-Feb-16
This is the Noiseless Chart version of the DNC Portfolio!
Without any Benchmark
No Worries about whether we are in a bullish, bearish or sideways market
No Nail-Biting Finishes
Absolute Returns, Noiseless Returns
Techniques
• System should dynamically handle losing streaks and cut-down position size
• This can be done by trading only when all-3 are in our favour:
– Trend
– Momentum
– Strength
• There are 3 types of positions a trader can have
• 1st and 2nd are well understood i.e. Long & Short
• 3rd one i.e. Being in Cash is least understood. Cash is also a position. At times
Cash is King.
Drivers of Money

The momentum factor The quality factor is described The size factor has captured
refers to the tendency of in academic literature as the tendency of small-cap
winning stocks to capturing companies with stocks to outperform bigger
continue performing well durable business models and companies over the long run.
in the near term. sustainable competitive
advantages.

The foundation of value A minimum volatility


investing is the notion A yield (or high dividend
strategy involves buying
that cheaply priced yield) investment strategy
stocks based on the
stocks outperform pricier gains exposure to companies
estimate of their
stocks in the long term. that appear undervalued and
volatility and
have demonstrated stable
correlations with other
and increasing dividends
Source: MSCI stocks.
Strength of Currencies v/s USD

- Currency relative strength is one of the single largest factor driving money flow.
- The interplay of the Six Drivers and Currency Driver is what together determines the
global money flow.
Thanks. Be Protected.

vivek@dravyaniti.com
9870104332
Twitter: @technovestor
LinkedIn: https://www.linkedin.com/in/vivekgadodia/

www.dravyaniti.com
Session 8
Evolution of a Trader

Sriram Balasubramaniam
My Journey over 30 years in
Markets-Investor-Broker-Member-
Trader
1.How I became a Stock Broker:
My fight with MSE Broker in Tata
Steel. That fateful Day:
Lesson: Never aspire to be
someone whose psyche doesn’t fit
into your mental comfort
2.Why I chose Coimbatore over
Madras:
Lesson: Never choose a
city/location of a business based on
your comfort level.
Assess its capacity and your ability
to cope
3.My Reliance Episode: Run up
from 100 levels to 160+ Short
positions Jan1991 to May 1991
Lesson: Never take a position in
stocks which you can’t support
financially or psychologically. Either
is bad for your managing your
positions.
4.Reliance Episode: May 1991 Rajiv
Assassination
Lesson: Exit when situation offers
you when you are wrong in original
trade. Never try to make a good
trade out of a wrong decision. If
there is God he gives you an
opportunity to exit. Take the lead.
5.Dr.Agarwal Episode: Multi
exchange arbitrage. Multi
settlement system. How one gets
screwed by system when you don’t
understand it.
6.SBI Delivery: Wrong
understanding of short positions in
markets. Delivery on one’s head
How it screws your finances.
7. NSE evolution. Year 2000 and
Himachal Futuristic rise: SLBM
system operations in markets and
how people were sucked in.

No price is too high nor too low.


2008 Jan 21st: What happened in
our brokerage house: How many
paid and how many lost.
8.Why I left broking?
9.Trading firm. Size matters. Trading
Capital importance. Tryst with
some big training people like Oliver
Valez and Greg Capra.
Conclusion
Rudyard Kipling’s IF
If you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or being lied about, don’t deal in lies,
Or being hated, don’t give way to hating,
And yet don’t look too good, nor talk too wise:

If you can dream—and not make dreams your master;


If you can think—and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you’ve spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build ’em up with worn-out tools:
If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breathe a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: ‘Hold on!’

If you can talk with crowds and keep your virtue,


Or walk with Kings—nor lose the common touch,
If neither foes nor loving friends can hurt you,
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds’ worth of distance run,
Yours is the Earth and everything that’s in it,
And—which is more—you’ll be a Man, my son!
Thank You
Session 9
CAPITAL

INFRASTRUCTURE BACKUP
MONEY

BACKTESTIN
G
TIME MONEY NO BOSS

NO RAT RACE 100% WHITE REMANING


MONEY ANONYMOUS
No monthly income
Increasing size
(exceptions are some
exponentially
option strategies)

Pressure to make money


Friends/family think that
(due to lack of regular
you are jobless
income)

Psychology screwups Sitting is new smoking


more prevalent
Entrepreneuri Find your
al mindset own mentor

If you are a VC, would Mindset to execute Feet on the ground


you fund yourself? 100% - the real Holy and eyes on the stars
Grail
Twitter: @madan_kumar
Web:
www.marketswithmadan.com
DECMA 2018
Definedge Solutions
17-18, Lokmanya house, Near CNG pump, Paud road, Kothrud, Pune - 411038

www.definedge.com
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